How to Reduce the Cost of Investing

Are you paying more than you should be for funds? If you invested before regulation introduced in 2013 you could make one simple swap to halve the cost of investing

Emma Wall 15 June, 2015 | 5:04PM

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When did you buy the funds your portfolio? If you invested before 2013 chances are you are paying more than you should for your fund investments. Before the introduction of regulation called the Retail Distribution Review in January 2013 investors’ money went into fund’s higher charging share classes. The fees on these share classes included the commission payments received by financial advisers.

When the regulation banned commission-based advice, cheaper ‘clean’ share classes were introduced which charged significantly less – in some cases halving the cost of accessing funds. According to the Investment Association, after January 2013 new investments poured into these clean share classes, taking 80% fund flows.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

About Author

Emma Wall  is former Senior International Editor for Morningstar

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